Massive class action potential as Florida man sues over Liberty Mutual insurance rise
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According to a NY Times report, last December Romeo Chicco faced rejection from seven insurance providers before finally securing a policy at nearly twice his former rate. A recent legal filing seeking to establish a class action claims the giant jump in premiums was linked to his 2021 Cadillac XT6’s invasive data tracking.And, as reported in Insurance Business earlier this week, Chicco isn’t the only policyholder complaining to the Times.
Dubbed by some as “smartphones on wheels”, many modern vehicles are internet-connected and equipped with various sensors and cameras. These sensors can, in some cases send telematics data back to the manufacturer, and from there the data can be sold to carriers. This telematics market is dominated by US-based Progressive, Allstate, Liberty Mutual, Nationwide and State Farm. At the end of 2022 there were 16.8 million telematics policies in the country – and growing at a CAGR of 11.7%, that number is predicted to reach almost 30 million by 2027.
Chicco claims that he had no idea that his car was telling anyone about his premium-increasing driving habits until learned from a Liberty Mutual representative that his insurance application was declined due to findings in his “LexisNexis report”.
LexisNexis Risk Solutions is a firm that compiles data for insurers on drivers’ histories andhas been gathering information for insurers for a number of years. It had detailed records of Chicco’s driving habits, provided by Cadillac’s parent company, General Motors.
Upon reviewing his report from LexisNexis, Chicco discovered it chronicled 258 of his journeys in the last six months, including specific details like trip durations, distances, and instances of speeding or abrupt driving maneuvers. This discovery led him to file a lawsuit in the US District Court for the Southern District of Florida against General Motors and LexisNexis Risk Solutions, alleging breaches of privacy and consumer laws. This action comes in the wake of a New York Times investigation that uncovered the secretive sharing of driver information with insurers by car manufacturers, potentially leading to higher insurance premiums for some. LexisNexis and another company, Verisk, reportedly have access to a vast amount of driving data from countless vehicles.
Chicco’s pursuit for answers from GM and LexisNexis about the alleged unsolicited data collection met with explanations that linked the data transmission to his involvement in OnStar’s Smart Driver program via OnStar, GM’s connectivity service also implicated in the legal action. Despite claims of never enrolling in OnStar or the Smart Driver initiative — though he did use the MyCadillac app — Chicco remains baffled about his supposed participation in the program, telling The Times, “What no-one can tell me is how I enrolled in it. You can tell me how many times I hard-accelerated on Jan. 30 between 6am and 8am, but you can’t tell me how I enrolled in this?”
In response to inquiries, GM spokesperson Malorie Lucich told the NY Times that enrollment in SmartDriver happens through the connected car app or at dealerships, as detailed in OnStar’s privacy statement, which mentions the possibility of data sharing with third parties. She added, “GM’s OnStar Smart Driver service is optional to customers,” emphasizing the program’s aim to educate customers on safe driving and vehicle performance for potential insurance benefits, with the option for users to withdraw at any time.”
In another response a spokesperson provided the following statement:
“GM’s OnStar Smart Driver service is optional to customers, who give their consent three times before limited data is shared with an insurance carrier through a third party. Customer benefits include learning more about their safe driving behaviors or vehicle performance that, with their consent, may be used to obtain insurance quotes. Customers can also unenroll from Smart Driver at any time.
- “The driving behavior insightscan only beshared when a customer explicitly consents through an insurance carrier to have the data shared. This is after two other consents as well, one at the time of accepting privacy terms when enrolling in OnStar, and the other at the time of consenting to and enrolling in Smart Driver.
- “The goal of these programs is always to reduce the total cost of insurance, and millions of GM customers have saved on their car insurance because of such services.”
“Relying on consumers to fill in the critical, but sometimes non-obvious or unknown, details for their insurer to then assess risk and provide an appropriate premium back to the consumer can be a cumbersome and unreliable proposition,” a Lexis Nexis spokesman told Insurance Business when promoting the service.Chicco, presumably following legal advice, has refrained from further comments post-lawsuit filing.
GM’s OnStar reports data after every drive, includingspecific driving behavior data, including hard braking events, hard acceleration events, speeds over 80 miles per hour, average speed, late night driving, seat belt usage, when and where these events occur, and the number of miles driven.
The controversy has caught the attention of experts like Georgetown law professor David Vladeck, who, speaking to the NY Times warned “Just wait for the avalanche. It’s coming.”
The debate has also caught the attention of lawmakers - Massachusetts Senator Ed Markey has already asked the Federal Trade Commission to take aclose look at the practice. “With new advances in vehicle technology and services, automakers have been vacuuming up huge amounts of data on drivers, passengers, and even individuals outside the vehicle,” he wrote. “Based on public reporting and responses to my own inquiries into these practices, automakers face few, if any, limitations on the collection, use, and disclosure of this data. Consumers are often left in the dark. I therefore urge the FTC to investigate the automakers’ data practices and take all necessary actions to protect the privacy of all road users.”
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